It's not as simple as ABC – investigating bribery and corruption allegations – transcript

The following is a transcript of an interview with George Cooper, Partner, conducted by Julie Mills, Head of Workplace Learning. 

Hello, and welcome to the Singapore episode of our first Ashurst Employment World @Work podcast series.  I'm Julie Mills. I'm the Head of Workplace Learning based in our Sydney office, and in this episode we're looking at investigating anti-bribery and corruption allegations against employees, and particularly in the Asia-Pacific region.  I'm joined by George Cooper today, Head of the Ashurst Asia Employment practice.  

So, George, an employer becomes aware of an allegation that an employee's been engaged in some sort of bribery or corruption, what should they do?

Covert preliminary enquiries

Thanks, Julie.  Well, at the initial stages, it's important to ascertain what the allegation actually is, what is its scope, and might the conduct complained of constitute bribery or corruption. And at that stage, generally, it's important to avoid disclosure of the allegation to a population of personnel as far as possible.  That initial information gathering exercise should be done covertly so the personal involved are not alerted to the issue.  

How do you work out what falls within the scope of 'bribery' or 'corruption'?

Bribery and corruption are, obviously, broad concepts. Company personnel would typically refer to their own policies, codes of business conduct, bribery policies etc.  Sitting beneath that, of course, and behind that are the legislative regimes, dealing with bribery and corruption, and to a greater or lesser extent, we have anti-bribery and corruption laws across most, if not all, Asia-Pacific jurisdictions.  

Okay.  So, they're working primarily to internal documents which have been drafted to meet external requirements?

Indeed.

Okay.  And are they often internal compliance policies, whistle-blower policies, a combination of those?

Yes.  Well, you mentioned whistle-blowing. In some jurisdictions, there are whistle-blower provisions and protections in relation to allegations and individuals who make allegations of bribery and corruption.  And they're very important, these provisions, because the compliance requirements might relate not only to protection of the individuals concerned, that is protection from retaliation and reprisal, but possibly also to maintaining the anonymity or not disclosing the identity of the whistle-blower.  And there might also be restrictions around the ability to further disclose the information that has been provided by the whistle-blower, and yes, it's important for the employer to be aware of any whistle-blower obligations at that very early stage.  

Okay.  So issue comes in, you need to work out if it's within the scope of a bribery or corruption issue, and then work out if you've got whistle-blower obligations in terms of how you manage it.  And you were saying earlier that you start … I think the word you used was covert, in a covert methodology, and I assume that's some sort of preliminary enquiry at the start, is that right?

Yes, that's right. The reason that the initial enquiries ought to be conducted in that way is to avoid the destruction of evidence, tampering with evidence, interference or tampering with witnesses, and victimisation or retaliation or reprisal against the individual or individuals who have made the complaint or the report in the first place.

Thanks, George.  I think there's probably lots of very rational reasons for trying to keep it covert.  I guess what I'm wondering is how does this requirement to keep things so quiet at the front, sit with procedural fairness requirements towards an accused employee throughout the region?

Overt investigations and procedural fairness

We have to remember, Julie, that we're talking about the early stages of the process and, in fact, the initial stage, as I said, is one where the employer is determining whether an investigation is even necessary.  Let's assume that the employer has established that there is a bona fide complaint of bribery or corruption on its face. Now, that will mean typically that an investigation is necessary.  Consideration will have to be given as to when the investigation becomes overt, and in particular, when the alleged wrongdoer, the suspect, if you like, will become aware of the allegation and be given an opportunity to respond to the allegation.  You mentioned procedural fairness, Julie.  Typically, across jurisdictions, some measure of procedural fairness is required, and regardless of any legal obligation to afford the individual procedural fairness in terms of potential protections or legal causes of action that they might have, simply based on the principles of carrying out an effective investigation, it will be necessary to interview that person and give them an opportunity to give their side of the story. So to an extent, procedural fairness is built in to the investigation process.

So if we just come back to the covert stage, I know I've seen lots of issues around IT reviews and finance reviews.

Yes.  Both, at the pre-investigation scoping stage, if you like, and also at the early stages of the investigation proper, it will typically be necessary or advisable to carry out some form of forensic IT review or audit exercise, review of email accounts and also often a forensic financial review.  We are, after all, talking about bribery and corruption. It's all about where money goes and how money is appropriated and forensic accounting experts can often carry out quite an extensive measure of investigation behind the scenes on a covert basis before the relevant personnel are aware that an investigation is even on foot or anticipated.  And the same can be said in relation to the work that forensic IT experts can carry out.  

And George, in terms of getting that forensic data, the IT and the finance reviews, I know clients often struggle as to whether they should do it themselves or whether they should go external.  What's your view?

There are no hard and fast rules, Julie. My general view on this is that external experts ought to be engaged sooner rather than later.  The external specialists in this field are adept at carrying out thorough review exercises in a covert way and, importantly, in a way that preserves evidence and ensures that in the event that there are legal proceedings later on, evidence can be presented and relied upon without being impugned in any way in relation to how the evidence or the information is being managed in the meantime.  Some companies will, I suppose, have that capability, but often it's advisable to engage external expert assistance at an early stage.

Let's say that the data's gathered, however it's gathered, there clearly are allegations that need to be put.  We move it from the covert stage to the overt stage, and so obviously we're telling people now. George, would you generally recommend that allegations be put in writing or be put verbally in a meeting to the person who's accused?

We talked about procedural fairness, Julie. At that disciplinary stage, generally speaking, often I would say it would be necessary,  having regard to the principles of procedural fairness, to set out in writing the allegations which are being made or the tentative findings that have been made with respect to the individual, so that they can be given an opportunity to respond.

And are there particular jurisdictions where that requirement is stronger than others?

It does vary across jurisdictions, and it varies in terms of the situation of the individual concerned and whether they qualify for statutory dismissal protections.  In Australia, for example, unfair dismissal protections don’t apply to all employees.  Some employees are not subject to the unfair dismissal regime, and therefore there may not be as strong a legal impetus for providing procedural fairness from a disciplinary perspective. At the other end of the spectrum, there are some jurisdictions where a very high level of procedural fairness must be afforded - Malaysia, India, there exists the concept of a domestic enquiry where disciplinary proceedings against employees must be conducted in the fashion of a quasi-court or tribunal hearing, where witnesses are called and cross examined etc.  So yes, it depends on the jurisdiction and the circumstances.

Right.  So the jurisdictions with a stronger procedural fairness element, such as Malaysia, India and Japan, that's where you would be looking at putting it into writing as opposed to giving them in a meeting without advanced notice?  

Yes.

And what about suspending an employee during an investigation, because I know you were talking about the obligation to keep things confidential and covert.  Is suspending or directing someone not to attend work an option for how to help do that?

Well, suspension is a very important issue and that's one reason why the initial scoping and initial stages of the investigation would generally be done covertly because that enables the employer or the investigator to carry out some of the work without having to worry about the issue of suspension, because it's business as usual, the suspect is simply continuing to work as normal.  Once the suspect, or the accused, if you like, becomes aware of the allegations and the investigation, the issue of suspension must be confronted. Is it necessary, given the nature of the allegations, for them to be removed from the workplace and from their work?  Will it be necessary for their access to company IT systems, and so forth, to be suspended?  That would depend on a number of factors: the nature of the allegations, how serious they are, whether, objectively speaking, there might be a risk of further wrongdoing, destruction of evidence, covering of tracks, and so on.  There is, obviously, a human element to this.  Is it necessary to remove that person from the work environment so that they're not in proximity with the complainant, for example, or the person who has made the allegation?  Or it might be necessary to remove the person from a work setting with witnesses.

It's really a balancing act of weighing up the risk of the conduct continuing and the preservation of evidence and witnesses versus the procedural fairness concerns of being seen to pre-judge the outcome.  Is that essentially what it comes down to?

Yes.  The employer would be emphasising at that stage that no findings have been made. Of course, a suspension would typically have to be on a paid basis, the employee would continue to receive their usual remuneration, they just wouldn't be attending the workplace and would be relieved of their obligation to work, and that's part of this concept of not pre-judging any outcome.

Managing simultaneous internal and external investigations

Okay.  Then, another issue that often comes up when you're dealing with bribery and corruption issues, is where external parties are involved, either law enforcement or regulators.  So, George, say you've got a circumstance where the issue's already hit the external parties and they're conducting their own investigation - can our client then effectively just sit back and wait, and rely on the external investigation?

In an ideal world, the employer might want to sit back and let the external investigation run its course, and to rely on that investigation and its findings and its outcomes. However, that simply may not be feasible.  External regulatory investigations typically take time and they can take a long time to run their course. Now, if that's the case, the employer may not be able to allow suspension on pay to continue indefinitely, or seemingly indefinitely, whilst an external process is running its course.   And the  individual concerned will not want that either. They will generally want speedy resolution and outcome of these matters. Often it's necessary for the employer to continue with their internal investigation and their internal process.

Legal professional privilege and protection against self-incrimination

And that takes us, Julie, to the question of privilege and the question of why, ultimately, the internal investigation is being carried out.  If the dominant purpose of the investigation is to enable the company to take legal advice, to enable legal advice to be provided by the company's lawyer, then, depending on the jurisdiction, certainly in most common law jurisdictions, then the documents that are created in the course of that investigation will attract privilege and will not have to be disclosed to external investigating authorities and will not have to be produced in evidence in any proceedings.

George, the privilege issue is a really interesting one, because I do a lot of investigations and ultimately I find the question is: are we conducting the investigation in anticipation of legal proceedings, or are we conducting the investigation for business and commercial purposes to comply with internal policies to make business and commercial decisions?  And if it's the latter, I think there's a strong argument that privilege doesn't apply.

You're right, and you mentioned the anticipated legal proceedings, which is a another branch of privilege, and I mentioned advice privilege. In some situations the purpose of the investigation will be simply for the employer to ascertain what has happened and to ensure that steps can be taken to deal with that. It won't necessarily be specifically about obtaining legal advice or preparing for legal proceedings.  Now, those questions are not simple questions and consideration needs to be given to that at an early stage.

I think that's the message, really, isn’t it, George, is think up front if you want to try and protect these documents from disclosure, you look at whether you can set it up to attract privilege, because you can't set it up halfway down the track.

That's right.

There is that very serious potential of criminal prosecution lurking alongside of an internal investigation into bribery and corruption. I guess there's a real possibility that an individual could claim the right to silence or some sort of privilege against self-incrimination.  How does an employer manage that, if it comes up?

There is a broader question as to whether an employee, who is suspected of engaging in serious wrongdoing, can be compelled to participate in an internal investigation.  Now, we need to remember that, at least in common law jurisdictions, there exists in every employment relationship an implied duty and obligation to comply with reasonable and lawful directions of an employer.  And it is generally accepted that where an employer is investigating allegations of serious wrongdoing, that a direction to employees to cooperate in an investigation is a reasonable and lawful direction. But then the question is, once in that interview situation, whether the employee can be compelled to answer questions.  And if the employee chooses not to answer the questions, can that employee be subject to disciplinary action for failing to answer the questions? In Australia at least, there doesn’t seem to be a clear answer.  Where we see indications that the right of silence does extend into the employment context, I'm talking about the public sector, I'm talking about members of the police force and their disciplinary processes.   In the more general or ordinary private sector employment environment, the situation is unclear.

So George, comparing an investigation into bribery and corruption allegations to other types of investigations, it sounds like the process is very similar.  The differences are around the legislation.  So you mentioned  whistle-blower protection, the anti-corruption and mandatory reporting requirements.  Are there any other legislative requirements or differences between sort of a dare I say it, a 'run of the mill' misconduct investigation and a bribery and corruption misconduct investigation?

Yes.  We've spoken about forensic IT investigations, review of email accounts and so forth.  That will require consideration of data privacy regulation in the relevant jurisdiction.  Generally speaking, an employer has the ability to freely review its own computer systems, its own data, notwithstanding that employees may have used the systems for personal purposes.  But there may be exceptions, and there may be particular requirements to look out for.  In New South Wales, again, there are IT systems surveillance restrictions and requirements that employers need to be mindful of.  Those are probably the main statutory and regulatory areas that employers need to be mindful of.

Okay.  So just to wrap those up, it's whistle-blower protections, anti-corruption mandatory reporting requirements and data privacy reporting requirements which do differ across jurisdictions. So, George, I think that brings us to the end of a very interesting discussion.  Thank you for joining me to talk about this topic. Particularly in Australia, of great interest at the moment because we have a number of reviews going on into bribery laws and whistle-blower laws.  So it's certainly relevant to us and obviously more broadly across the region, because of the various settlements that have received a lot of attention.  

This podcast is actually part of our first four-part podcast series for our Ashurst Employment World@Work September edition.  So we hope you've got time to listen to the other three episodes from our Sydney, London and French colleagues, and we'd also love to hear any feedback you have about the new podcast format.  So, thank you for listening and we hope you can join an Ashurst Talks podcast again soon.